Lok Sabha passes Payment of Gratuity (Amendment) Bill, 2017

The Lok Sabha has passed Payment of Gratuity (Amendment) Bill, 2017 to empower government to fix period of maternity leave and tax-free gratuity amount with an executive order. The Bill seeks to amend the Payment of Gratuity Act, 1972.

Payment of Gratuity Act, 1972

It allows for payment of gratuity to employees in any establishment, factory, mine, oilfield, plantation, port, railways, company, or shop employing 10 or more workers.  Under it, employees are paid gratuity if they have provided at least 5 years of continuous service at time of termination.

Key Features of Bill

The Bill empowers central government to notify period of maternity leave eligible for qualifying as continuous service and determine amount of gratuity available to employees.
The maximum maternity leave, for the purpose of calculating continuous service under the Act, was based on the maternity leave provided under the Maternity Benefit Act, 1961. The Bill removes the reference to 12 weeks in Maternity Benefit Act, 1961 and empowers central government to notify the maximum maternity leave. Under the Act, maximum maternity leave was 12 weeks and was changed to 26 weeks by Maternity Benefit (Amendment) Act, 2017.
The Bill removes the existing ceiling of Rs 10 lakh amount of gratuity payable to an employee and states that the ceiling may be notified by the central government.

Month: Current Affairs - March, 2018